Friday, 1 November 2013

Another good LEANZ event

We've been having a good run with recent LEANZ events in Auckland, and last night's was no exception: Ed Willis from law firm Webb Henderson gave us a fine presentation on 'Promoting quality regulation' which was well attended and stimulated a lot of active discussion.

Ed, who describes himself as possibly the only person in New Zealand who is "passionate" about regulation (and he might be right, but that's OK), went through some of the tests for what good regulation would look like, instancing both Treasury's checklist - which you can look up for yourself in this Treasury paper - and a somewhat similar and equally useful paper I hadn't come across before, from the UK's Department for Business Innovation and Skills, 'Principles for Economic Regulation'.
Ed instanced two regulatory schemes as practical examples - the Overseas Investment Act, and the recent telco policy review - and his main points (on my reading) were two.

One, people can get confused between criticising the quality of regulation and disagreeing with the social policy intent of it. There'd be a lot of people (well, me anyway) who'd regard much of the policy intent behind the Overseas Investment Act as xenophobic, protectionist, and inefficient, for example, though that doesn't necessarily mean that the poor devils trying to implement the damn thing aren't making a halfway decent job of what's been dumped on them.

Two, sometimes regulation is trying to serve multiple and possibly mutually inconsistent purposes at once, which describes the telco policy review in a nutshell. You're unlikely to be able to satisfy everyone - if you want cost-based (and therefore probably lower) pricing for the copper network, you're going to upset the folk who don't want cheaper copper-based internet services getting in the way of the national benefits to be had from moving to a fibre network.

Ed was also pretty hot about the importance of transparency and accountability in regulatory frameworks, and who could argue.

In the context of accountability, could I give a nod to the folks at the Commerce Commission who have been doing the odd post-decision review of merger decisions, to see if things actually panned out the way they had thought at decision time? I know, there are folks who argue that the methodology for doing this kind of exercise is not up to scratch, and especially not if you're going to try and do a cost-benefit analysis and put $ numbers on the value of decisions, but I think that even a qualitative scan, with hindsight, of whether you got the main trends and factors right, is absolutely a step in the right direction.

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Welcome to my economics blog

“The remarkable thing about economics is that once you've been exposed to the big ideas, they begin to show up everywhere … Economics offers insight into wealth, poverty, gender relations, the environment, discrimination, politics...How could that possibly not be interesting?” - Charles Wheelan, Naked Economics: Undressing the Dismal Science, 2002

"The soundest argument for markets ... is simply that, very frequently, they are the least bad of the alternatives. To paraphrase Winston Churchill's remark on democracy, markets are the worst form of resource allocation, except for all the others that have been tried" - Prof George Yarrow, Three Lectures on Privatization, Jagiellonian University, Krakow, April 1990

"And if there's one thing we've learned about flawed markets, it's that people flee from them, either physically or by resorting to back channels and black markets. Either way, flawed markets can undermine not just communities but whole nations" - Alvin Roth, Who Gets What - and Why, 2015

"Economic controversy is generally a thankless task. You cannot hope to make any impression on your opponent. Yet he is the only reader on whose interest you can count" - Francis Ysidro Edgeworth, Economic Journal, 1898

"There is some evil genius which sits at the elbow of every economist, forcing him into all sorts of contorted and unnecessary complications" - John Maynard Keynes, letter to Roy Harrod, August 1935

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